Central bank digital currency What is the difference between e-CNY and RMB in wallets?
The e-CNY is a digital currency operated by the central bank of China. How is it different from the RMB that exists in private wallets (i.e. AliPay and WePay)?

In my opinion, there is no difference between the e-CNY and the RMB in private wallets.

When a consumer in China wants to pay to a merchant in a physical store, he can pay with RMB in his private wallet or with e-CNY in his central bank wallet. 

He can also pay an online merchant in the same way, i.e. using a private wallet or a central bank wallet.

If this is the case, why does the central bank in China wants to issue the e-CNY?

I cannot see any useful purpose in issuing the e-CNY as a different currency from the RMB in the private wallets. 

Some people say that the central bank has better control over the e-CNY, compared to the existing RMB. I do not think that this is the case for the following reasons:

a) The private wallet platforms need to be approved from the central bank 
b) The RMB in the private wallets are transferred from the RMB in the bank accounts under the control of the central bank. 
c) The central bank is already able to monitor the digital payments using the RMB, without creating a new currency (i.e. e-CNY).

The only reason for the issue of e-CNY is that the central bank can allow foreigners to hold the e-CNY and prevent them from holding the digital RMB.  

I am not able to understand the logic. Surely, the central bank can allow foreigners to hold the RMB in the banks or the private wallets and still monitor the payments? 

My conclusion is - there is no need for the central bank to issue the e-CNY as a separate currency from the RMB that now flows through the bank accounts and private wallets. 

Maybe, there is a real purpose that I am not aware of. 

Tan Kin Lian






 

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